Elia Group 1H25 Results blow-out on German profit recognition items

The 1H25 trading update largely overshot our expectation with 269.3m, a 48.4% increase vs. our 223.8m expectation. This was mainly thanks to much better net profit at the 50Hz division that now benefits from a pro-rata profit recognition (+28.1m), higher capitalized interest (+16.6m) and a pre-financing agreement (+13.4m). ETB also came above our expectation and benefited from a 9.7m one-off compensation. Elia confirmed its FY25 outlook for Net Group Profit to Shareholders between EUR 490m and 540m. The outlook is now based on a 10y OLO of 3.1% vs. 2.8% previously and a 10y bund of 2.5% vs. 2.3%. After the 2.2bn equity issue, Elia recovered from the overhang uncertainty and is trading above our EUR 95.0 target price. We expect the stock to continue its strong performance as it has been a good hiding place in the current tariff uncertainty. The importance of grid infrastructure has also made a come-back after the Iberian black-out and the Datacenter gold-rush. We will review our rating and target price after the conference call at 10h00.